A federal judge yesterday blocked Washington businessman Joe L. Allbritton's plans to obtain control of Riggs National Bank, granting Riggs a Temporary restraining order that Allbritton's lawyers said exposes the takeover attempt to "severe risk."
U.S. District Court Judge Norma H. Johnson granted a Riggs motion to bar temporarily Allbritton's efforts to take over the city's largest financial institution, saying that the bank had demonstrated "a substantial likelihood of success" in its court fight against the takeover. Allowing Allbritton to proceed, she said, might do "irreparable harm" to the bank.
Johnson also said the public interest would be favored by granting the motion, an issue in the proceedings that later provoked Allbritton attorney Stuart Shapiro to observe: "This is a fight between a bunch of rich people, some of whom have a bank . . . not a public interest law suit."
The court order prevents Allbritton from acquiring or soliciting any stock until a hearing on a preliminary injunction can be held March 9. The order also gives shareholders who have offered to sell stock to the former Washington Star owner another six days to change their minds.
Yesterday's ruling placed an apparent successful takeover effort just out of Allbritton's grasp. In a statement released yesterday, Allbritton said that 687,764 shares of stock had been tendered in response to his offer to buy at least 600,000 shares of the bank's stock at $67.50, a price well above the $50 at which the stock was trading the week before the offer was made.
Shapiro also noted than no offer of shares has been withdrawn despite published charges by the bank that Allbritton failed to disclose relevant financial information when he made the offer and that his actions may violate federal banking and securities laws.
If Allbritton ultimately succeeds in acquiring the stock and adding it to his already substantial holdings, he will control more than 35 percent of the bank's ownership.
In a last-minute attempt to stave off the temporary restraining order, Shapiro said he was willing to sit down in court with Riggs lawyers and, to disclose whatever the bank and the court agreed still needed to be revealed, but no settlement attempt appeared in the offing.
"We won round one," Riggs attorney Fred Vinson said after yesterday's hearing.
Allbritton's lawyer had argued that the court action jeopardizes the Texan's attempt to gain control of the bank. "If he loses control of this company as a result of the court order, he will have no way of putting himself back through the federal courts in the way he would have been without the order," even if Riggs is subsequently found to have been wrong in its allegations, Shapiro said.
Shapiro asked the court to impose a $5 million bond on Riggs to protect Allbritton from costs and damages. "He got $31 million in this bank already," he said. He also noted that Allbritton's interest in the bank began when he was "invited in" by Riggs management.
"He came in not as some fellow trying to take them over. Mr. allbritton came in at their invitation," Shapiro said.
Johnson imposed a bond of $25,000 on the bank.
Under the term's of Allbritton's offer to buy shares, he may not purchase any of the proffered stock until March 10. The offer also set March 3 as a deadline for shareholders to withdraw offers to sell. The order yesterday extended that deadline.
Allbritton is a Texas investor who bought and subsequently sold the Washington Star.He is chairman of Allbritton Communications, a company based in Washington which controls WJLA-TV (channel 7) here and television stations in Lynchburg, Va. and Charleston, S.C., newspapers in New Jersey and Massachusetts and a radio station in Kansas City. He also owns an insurance company and bank holding company in Houston.